Longtime Raymond James energy analyst Pavel Molchanov talks to ThinkAdvisor about his top oil stock picks and whether President Trump can save the coal industry
Is there another major country in which oil demand is growing faster than China?
India is the only one. We’re also seeing strong oil demand grow in Africa, but that’s a smaller base. What’s driving demand in all three of these countries is the middle class buying more cars, people moving into cities from the countryside, more airline traffic [and so on].
Slightly over a year ago, the price of oil plummeted to a cyclical low of $27 per barrel. Here’s good news: Oil is in recovery — not a steady recovery, mind you, but one that will hit a price peak of about $70 by year’s end, says Pavel Molchanov, energy equity analyst at Raymond James & Associates, in an interview with ThinkAdvisor that includes his top oil stock picks.
Yes, oil inventories are down because of companies’ production cutbacks. But what Molchanov is watching carefully, too, is another key indicator: oil companies’ capital spending, which, over the past three years, saw an enormous 60% in investment reductions.
Molchanov, RJ’s energy analyst for 14 years, is indeed bullish on oil in light of the recovery. But he is hardly upbeat in his outlook for natural gas this year. That energy source is still suffering from oversupply and reduced demand.
During Barack Obama’s presidency, America became the world’s fastest growing producer of oil and gas, as well as a substantial generator of wind and solar power. Coal was a loser, largely because natural gas replaced it. A decade ago, coal had 50% of the electricity market; now it takes only about a third of market share, according to Molchanov. (by Think Advisor)